by Jose Jimenez | Jan 20, 2022 | ERP
[vc_row][vc_column][vc_column_text]
The accounts payable department in a business refers to the work where you pay your suppliers and, in turn, receive the products to put up in your store. Any pending payments, any discounts to be availed, and all the paperwork associated with your accounts belong to the AP department.
Source: https://www.weforum.org/agenda/2021/11/how-to-stop-supply-chain-issues-disrupting-the-economic-recovery/
While the supply chain involves a lot more than the scope of this article, any disruption in the supply of products or the selling of these products will lead to a disruption in the accounts department of your business. This article will highlight how the ongoing supply chain crisis affects your AP department.
Delay in payment
With the advent of the pandemic, every industry has seen a huge shift in the supply and demand of products. The clearest of them all is in the sanitation industry. While people used to buy sanitary products like masks and sanitizers before the pandemic too, after the virus took effect the demand increased explosively, causing there to be excess demand and inadequate supply. Due to this break in the supply chain in various such sectors, many big companies have started delaying their payment to their suppliers.
These delays in payments are nowadays extended to over 90-120 days, which is a very long time to go without any payment. Such actions affect the trust between you and the supplier and also adversely affect your AP department. Backlogs in such payments can increase the workload and the paper load in the accounts department.
Additional Financial Costs
When there is a shortage of a certain product, like we have seen a lot during the first wave of the infamous CoVID-19 pandemic, it is often followed by inflation. This isn’t just at the retailer to the consumer level but also at the distributor to supplier level. This means that if you want quick and immediate services, you often will have to pay a lot extra. These financial costs are not just damaging your business, but your accounts department too.
If you have automated your AP workflow, there are certain values you might have entered for the cost of certain products. You’ll have to overwrite all the costs that you have fed in, which is a huge hassle. It is even harder if you are doing the work manually, you’ll have to account for every last penny that is being spent in the company.
Subpar product quality
As demand increases, production will also increase. However, keep in mind that all the processes are facing an increasing shortage of raw material or the supply of the same. Due to this, the product quality is affected gravely. Any form of marketing or branding falls short of making the product successful if you don’t have the quality to back it up. The products that are being made after the pandemic have defects, which disappoint the retailers, which ultimately adds up to the supply chain.
Any form of defect in the product means that it will be returned or scrapped, both of which incur losses in the ledger of the company. This ledger is then overlooked by the accounts payable department, which has to look at all the payments that have to be made to the vendors and suppliers. This is also a matter of goodwill between you and the vendor.
Difficulty in accessing capital
Many small businesses find it difficult to access their capital in the middle of such a supply chain crisis. They find it difficult to pay basic bills like electricity or water bills and to top it all off there is a shortage of products. This causes the capital to diminish at a faster pace causing the business to see many ups and downs. This supply chain crisis has been affecting everyone adversely, especially the businesses that had been steadily growing before the lockdown.
The accounts payable departments of these businesses have been growing too, considering that they haven’t been dealing with big amounts of money. This means that due to the excessive workload these businesses are facing, they have been suppressed and haven’t been growing well. Capital has been a problem for many startups, due to which many people have been facing a great deal of stress.
Endangering goodwill
The goodwill between the business and the supplier is a very pristine relationship that should not be broken in any situation. However, this supply chain crisis puts this goodwill between a rock and a hard place. Suppliers find it hard to supply the product to the retailers on time, while the business people find it hard to pay off the money on time. Due to this, the accounts payable department also faces many mishaps; the entire money is put on hold, the paperwork increases, and the workload gets stressful. This also adversely affects the AP workflow.[/vc_column_text][/vc_column][/vc_row]
by Jose Jimenez | Jan 18, 2022 | Accounts Payable
[vc_row][vc_column][vc_column_text]
Vendor Vetting Process
[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Accounts payable workflow is one of the most important parts of a business, and vendor vetting helps the business to divert risks if the supply chain goes awry. How are they linked? How does automating the AP workflow help in vendor vetting? Many such questions will be answered in this article.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_single_image image=”2808″ img_size=”full”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]There are many aspects of a business you just can’t ignore while running one. Vendor vetting is one such aspect where you cannot compromise. Read on ahead to find out what it is and how you can do it in your business.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
What is Vendor Vetting?
Vendor vetting put simply, is a risk management procedure that businesses often do to avoid threats from any supply chain crisis that may occur. People select vendors to become their partners, but the vendors should be compliant with the standards and regulations of the company. The vendor’s requirement might vary from company to company, which means, even if two companies are selling the same product, they might have different regulations for the vendors, depending on their geographic location and other factors.
Vendor risk management is an important precursor to vetting. Evaluating your potential vendors and the risk associated with them can reduce any disruption associated with the process.
Here are the steps to make the selection of these vendors easier. Proper vendor selection criteria have to be set up, search sources for suppliers, establish a few ground rules for the suppliers to come, and finally, compare the final list to recruit a vendor. Vetting proper vendors can make a business much more efficient.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column width=”2/3″][vc_column_text]
What to consider while vetting a vendor?
Various factors need to be considered before you delve into vendor vetting. You need to understand the impact of this decision on your business; they are ultimately the decisions you need to make or the needs you have to fulfill via this supplier. Here are the impacts a vendor will have on your company:
- They provide some functionalities to the business; they generate the needs and requirements. This is directly related to the AP workflow as it is a workaround for any form of supply chain disruption; it is a safety net to fall on.
- They expand your business network a lot. It increases the collaboration of all suppliers and makes payments easier. This, in turn, also reduces business costs, which is a big plus point.
- They can easily be integrated with ERP systems and the AP workflow of your business. They help validate your budget and help in maintaining a business document workflow.
- They help expand the business in the global deployment of the workforce and business. They help in multi-currency transactions, which is an important part of your workflow if you are working in multiple countries or multiple languages.
- They help in building an ecosystem approach, which means that you can have multiple vendors for multiple products. This way, one person doesn’t have all the load, and you can get a much more efficient job done.
[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_gallery interval=”3″ images=”2810″ img_size=”large” onclick=”custom_link” custom_links_target=”_blank” custom_links=”#E-8_aHR0cHMlM0ElMkYlMkZvYXBwc25ldC5jb20lMkZvYW4tYXAtcG9ydGFsJTJG”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
What is AP Automation?
Accounts payable are the part of a business that helps you pay the vendor you have vetted, so automation has a big part to play in this process. But before that, you need to understand what automating your accounts payable workflow entails. Automating means that every process that is done manually will be done by a computer. While some companies manage a semi-manual AP workflow, completely automating it would mean each process is done by software or some artificial intelligence. To achieve this, you need to reform your entire workflow to accommodate digital data entry and digital payments to make sure everyone can operate the technology.
How are they linked?
Accounts payable and vendor vetting are deeply linked. Automation makes vetting easier; you also need to know what kind of vendors know how to use digital payments and accept online receipts. Automation includes any form of additional costs that may occur in the process, taking into account every little detail.
This entire situation leads to a lot of benefits for both parties. The supplier gains a trustworthy partner, while you gain a lot of discounts and a good network. This way, you are bound to get good products even if you expand, as you have established a sense of goodwill with your supplier, which will always carry on as the trust between you.
Conclusion
AP workflows and vendor vetting are two very important processes for a business. While they are not mutually independent, you cannot slack off on either, as they can greatly affect your business to make it or break it. Vendor vetting is necessary for a business to make sure that their work is done efficiently and they have secured a vendor for their needs in a specific sector.[/vc_column_text][/vc_column][/vc_row]
by Jose Jimenez | Jan 12, 2022 | Accounts Payable
[vc_row][vc_column width=”1/4″][vc_single_image image=”2771″ img_size=”full”][/vc_column][vc_column width=”3/4″][vc_column_text]
Vendors are an essential part of any business. They help keep the business running and supply you with an apt amount of products and/or raw materials. Keeping this in mind, making your vendors happy is quite necessary.
This also entails discounts and easier access to products. There are many ways by which you can do so; here are a few of them from a huge list of ‘vendor maintenance.’
Pay Vendors on time
Paying somebody on time is the best way to gain someone’s trust. Suppliers don’t expect that they will be deceived in these transactions, so they don’t mind late payments much (they might get extra money from the late fees), but the trust built on the basis of early payments cannot be broken easily once your business gets going.
Due to this, paying your suppliers on time should be on the top of your priority list. Restocking objects in your inventory can become really tough if your supplier isn’t delivering on time. It can cause your entire business to go awry if the processes are not functioning properly.
There are various ways in which you can maintain punctual payments for your suppliers. You can maintain proper accounts payable departments or automate the process to make it more efficient. This way making sure that you haven’t missed a payment to any of your suppliers becomes a thousand times easier.
Maintain a constant relationship
Maintaining a constant relationship with your supplier is essential to the utmost degree. How you interact with your customers is important, but how you interact with your suppliers is even more important. Interacting with your suppliers and making them feel important is essential to the quality of the products you might be trying to get.
A good dialogue provides the supplier with a good idea of what and whatnot you like. Suppliers, when kept happy (for that matter, any person you interact with), will give you the best they have, or at least will be motivated to do so. Once you properly communicate with someone and develop bonding transcending professionalism, they will be happy to serve you. They will be content to give you discounts and let you know what’s new and what’s better than the products you are using, so you can stay updated.
Take samples and give feedback
Whenever there is a new product in the market, you should contact your supplier and get the products. Once you use it, you need to give the supplier your feedback. This is essential for maintaining a healthy relationship with your supplier. Every time you get new products, there’s a chance that it might be the missing link to increasing your sales.
Feedback is an important part of maintaining a healthy relationship with your supplier. It helps the supplier know your sales better, so they can provide you with an apt amount of products. This feedback also lets them know if there are any defective products in their stock.
The effort you put in to establish a relationship with your supplier, the more you will be rewarded with discounts and better products. Even if you want to shift or expand your domain, the contacts you get from your suppliers can be absolutely essential. So, be on the lookout for any such opportunities.
Start out with your credit card
Your credit card can be an essential tool for your business, especially if you have just started your venture. Why is paying through credit cards good, you might ask. If you are a new business, the suppliers won’t give you any form of payment terms until you earn their trust (and some money from your business). In such a case, you have to pay via cheques. Writing cheques every time you get new stock can get redundant and tedious. This can also adversely affect your business as you need to keep track of every last penny that goes from your pocket.
Paying with credit cards is a win-win solution. You can pay your supplier without any trouble, without any paper trail, and as the payer, you have the liberty to pay back your credit card in 30 days. It is the most efficient solution to this situation and is also a good way to satisfy your supplier by paying them on time.
Conclusion
Keeping your suppliers happy is necessary for any business, as everyone is dependent on someone or another to provide them with raw materials or products to sell. Making them unhappy can not just cause you losses; it can also cut you out from the entire chain of suppliers; word spreads fast. Making your vendor happy can enhance the business, on the other hand. It is not even a tough decision to make and a very easy task to accomplish.
[/vc_column_text][/vc_column][/vc_row]
by Jose Jimenez | Jan 11, 2022 | Accounts Payable, Podcast
When companies merge, are acquired, or undergo a takeover some things are left out in the discovery phase. One of these things is workflows and processes with ap automation providers.
In part 2 of our chat with Daniel Reeve from Esker Inc we talk about the blockers faced with IT and Accounting departments when it comes to working with multiple systems and team integration within.
by Jose Jimenez | Jan 6, 2022 | Accounts Payable
Automating this process can be a hassle, but there are various ways in which you can ease into this transformation. This way, you can make sure that no employee feels left out or anxious.
This article holds the key to easing into the transformation of automating the AP workflow. Go through this article to make sure that there are no hitches in the AP workflow transformation.
Paperless Automation
Optimizing the entire AP workflow is a very obvious solution to make the entire process efficient and easy to use. But it comes with its drawbacks; many people who aren’t used to the digitized system can mess up and cause losses. To ease them into a system with paperless automation, the first step you can take is to give the employees trials before converting entire systems to a digital version.
You can conduct workshops and reinforce and reward behavior that enhances the team’s morale and the mentality to use such a system. This process saves a lot of money, it makes it so that you spend next to no money on the invoices, and the entire process, from data entry to the final payment, can be done cost-effectively and efficiently. Paperless automation is one way to make easy transitions, but you need to be prepared before any such change. Otherwise, you might end up making your employees anxious.
Streamline your workflow
Even for an automated workflow, errors while data is entered or the signing while cheques are being made can be harmful to the company as a whole. The more complex the systems, the more the chances of errors to occur. There can also be various hindrances in the approval process and tasks that have to be mandatorily manual. To reduce the chances of errors occurring, you need to streamline the entire process and standardize the quality of this work.
This form of centralized work works well for the company too, as it is believed to be quite organized. In the case that the company has multiple branches and you are the head of the AP team, all the company’s invoices will come to you for approval. Data redundancy can occur in such a situation which should be avoided wherever possible. But the fact that all the data needs to be centralized before moving forward stands; it is necessary for a streamlined workflow.
Firm up access controls
Access controls should be limited to a few people; that way, there won’t be too much of a chance of error. It also minimizes the duplication of data in case someone copies the data and reduces the chances of fraud. By limiting access controls, you might be cutting down on a small amount of transparency, but it increases the quality of the work by a huge margin. It is also one way to ensure that no one messes up the entire system by entering the wrong data unknowingly.
Giving the AP controls to specific people works well with the idea that the access controls have been secured and there is little to no chance of the breach of sensitive data. These invoices are often worth millions, and a small change here or there can cause the entire economy of the company to come crashing down. So tighten your hold on the access controls.
Standardize payment
Just like the workflow was standardized, if you standardize the method and delay before the payment, you should be able to build a good amount of goodwill with your suppliers. They will know what to look for to get the payment and when to expect it. This sets a flow that can’t be disrupted until there is an emergency of sorts in the company itself. This payment can be standardized to being online payments (It’s the easiest way to make payments, the most cost-effective too), cheques, or simply cash (This is rare in big businesses).
However, this standard way of payment shouldn’t include negotiations or renegotiations. If you can lower the costs or get more supplies for the same costs, go for it. Avail discounts whenever you can, wherever you can. Being efficient in the costing of your supplies is as important as being efficient with your AP workflow.
Keep information up-to-date
All the information, particularly the supplier information, should be up-to-date. This means that if any information is out of date, it can cause major issues in the company, along with huge losses. To avoid this, try to remain updated on the various contacts of these suppliers.
Conclusion
In conclusion, keeping the entire process efficient and streamlined is very necessary to the health of the company. Keeping this in mind, take care of the AP workflow, which in turn takes good care of your company.
